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2016 was one of the most dynamic years yet for the global payments industry. It was the year we witnessed increasing levels of payments innovation, not just within the mature banking and payment sector of the Western world, but from all corners of the globe. This innovation was – and will continue to be – driven by the demand for greater convenience and the trend towards integrated payments and increased collaboration in the sector.
Despite these common global drivers, payments innovation in 2017 will, of course, take different forms in different regions. In established markets, the focus will be on making life easier for consumers: giving them new payment options to suit their lifestyles and that are as user-friendly as the other digital services they know and love.
Tech-savvy consumers - those used to the one-click convenience offered by tech companies such as Amazon, Uber and Spotify - see no reason why a payment transaction shouldn’t be channel-agnostic and seamless. They know frictionless payments are technically possible and expect the market to cater to their demands. The better the experience on offer, the quicker the uptake will be.
In other parts of the world, payments evolution will take a different form. Markets traditionally regarded as less mature will begin to leapfrog countries with more established industries, and may even come to lead the pack when it comes to payments innovation.
India is a prime example of a country that is demonstrating world-leading payments innovation. India’s payments sector is in a growth phase, fuelled by the country’s intense smartphone growth. Indeed, with 220 million users, India is now the second largest smartphone market in the world and is still growing.
As the leading payments services provider in India, we can see first-hand that the country’s progress is accelerated by many of the necessary market ingredients for payments evolution. These include a progressive regulator that is open to adopting a legislative framework to promote innovation, dynamic funding options, the latest infrastructure and increased partnership opportunities between banks and start-ups. As a result, India is perfectly primed to bite at the heals of more developed fintech markets in 2017.
It is worth noting that, while it is encouraging to see more and more banks engaging with start-ups, collaboration must occur between all players in the payments ecosystem for innovation to truly flourish. This holds true across both established and high growth markets. The most progressive payments markets in 2017 will be those where collaboration goes beyond banks and fintech startups, and engages the entire payments value chain, to include the likes of regulators, merchants and consumers. Only time will tell which markets make this a reality, and which can do so quickly.
Although there is stiff competition to be crowned the hub of fintech innovation among the likes of New York and London, it is clear that, in 2017, we will see advanced payments innovation taking place across the globe. In a sector motivated by the demands for convenience, for integrated payments and for collaboration, the key to payments firms' success in 2017 will be how well they understand the local market dynamics that shape the adoption of new technologies accordingly.